Statistical portraits of American business elites: a review essay

Abstract

Since the early twentieth century, scholars have conducted statistical studies of groups of business leaders. These have often been extensive undertakings, calling for the collection of large quantities of information about business executives through the use of surveys, personal interviews, dictionaries, obituaries and biographies. The scholars who have carried out these studies have come from a range of disciplines, including sociology, history and economics. The questions they have asked have varied over time. Some have sought to uncover common characteristics among the executives themselves. Others have studied groups of businessmen in order to learn about society (especially the extent of social mobility), or about particular industries and the people who ran them. While the variety of approaches has led some to conclude that these studies present no coherent picture, this article shows an underlying pattern in these efforts and suggests a framework for future study.

CEO Pay and the Market for CEOs

“…The …gure plots the relationship between (the logarithm of) total pay of newly-appointed CEOs and Press. 24 What emerges is a pattern that is strikingly consistent with a talent interpretation of boards'pay for credentials decisions: the relation between CEO pay and reputational credentials is ‡at for relatively low credentials, and then increasing and convex, as predicted by competitive assignment models of the CEO labor market (Predictions T1 and T2). Table 3 presents results of our baseline regression analysis as well as of the two more inclusive spec-i…cations with additional …rm-level controls and CEO's pay in his prior position.…”

“…5 The motivation for this measure comes from the evidence by sociologists and work by Kaplan, Klebanov, and Sorensen (2011) that the selection process of corporate elites in the US has been relatively meritocratic. See alsoFriedman and Tedlow (2003) for a comprehensive review of the literature, and Capelli and Hamori (2005) for evidence.1 6 The top three classi…cations inBarron's (1980) are "Most Competitive,""Highly Competitive,"and "Very Competitive," which include 33, 52 and 104 undergraduate institutions, respectively. We were able to …nd information on the college attended in 95 percent of the cases.…”

Which Skills Matter in the Market for CEOs? Evidence from Pay for CEO Credentials

“…23 Support for this measure comes from the evidence by sociologists and work by that the selection process of corporate elites in the United States has been relatively meritocratic. See also Friedman and Tedlow (2003) for a comprehensive review of the literature, and Capelli and Hamori (2005) for evidence.…”

Review of periodical literature published in 2003

“…But top wage shares recovered rapidly from the late 1960s and are now higher than before the Second World War. Adopting a very different perspective, Friedman and Tedlow give a statistical portrait of American business elites during the twentieth century, devoting particular attention to social mobility and business leadership. Similarly, Piketty’s study of income inequality in France in the twentieth century reveals that owners of large fortunes, adversely affected by major shocks between 1914 and 1945, were never able fully to recover from these events.…”

“…Contributions by economists to economic history continue to be fruitful and incisive over a wide range of issues. In the history of political economy, Chao traces the development and impact of Friedman’s Permanent Income Hypothesis, and Marchionatti gives a more prominent role to the works of Frank Knight in the development of price theory in the period 1921 to 1925. At the macroeconomic level, Nicholas tests Schumpeter's hypothesis that firms with strong market power are the engines of technological progress.…”